The Minister of Finance, Minister Tito Mboweni, has delivered the Medium-Term Budget Policy Statement on Wednesday 24 October 2018.


  • Economic growth has been revised down from 1.5% to 0.7% in the current year, and the global environment remains challenging for emerging market economies.
  • Inflation is expected to remain within the 3-6% target band over the medium term, despite pressure from a weaker exchange rate and higher oil prices.
  • Revenue collections up to the end of September 2018 have grown by 10.7% compared to the same period last year.
  • It is estimated that the revenue collection for the year 2018/19 will show a shortfall of R27.4 billion. An underestimation of Value Added Tax (VAT) refunds due has led to an overly optimistic view of revenue growth.
  • The slow pace of VAT refunds has hurt the cash flow of several companies, including small businesses. The Acting SARS Commissioner has committed to processing the outstanding VAT refunds as quickly as possible.
  • The consolidated budget deficit is estimated at 4% in 2018/19, compared with the 2018 Budget projection of 3.6% of GDP.
  • Government debt is now expected to increase to 55.8% of GDP for this year, rising to 58.5% of GDP by 2021/22 to service the budget deficit. This is well up from February’s estimates of 55.1% for this year, rising to the previously estimated 56.2% for 2021/22.
  • Gross debt is projected to stabilize at 59.6% of GDP in 2023/24. Government remains committed to ensuring fiscal sustainability.
  • Over the next three years, government will spend R5.9 trillion, including R1.9 trillion on health and education, and R911 billion on social development.
  • Increases in the major tax instruments will be avoided unless the economic environment requires it.
  • Revenue projections assume no changes to tax rates but provide for annual adjustments to personal income tax brackets, levies and excise duties in line with inflation.
  • National departments’ compensation ceilings to be retained, which implies continued restrictions on personnel budgets and public employment.
  • Government is working with Development Finance Institutions (DFI’s) and private-sector partners on an infrastructure project preparation facility.
  • The 2018 public-service wage agreement exceeds budgeted baselines by about R30.2 billion through 2020/21. No additional funding is available, National and Provincial departments are expected to fund shortfalls by adjusting within their compensation baselines.
  • State institutions are being repaired and renewed, however, serious governance problems exist across the public sector. State-owned companies need to be reconfigured in several ways.


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